Food or Fuel?

Last year the Oregon legislature passed three bills (HB 2210, 2211 and 2212) to subsidize and to provide incentives to Oregonians to produce biofuels. Promotion of homegrown ethanol and similar biofuels was seen as an answer to high global oil prices and supply worries. The Oregon Environmental Council predicted 100 million gallons would be produced annually by the year 2010.

Now, a brewing world food crisis has hit the headlines. World food prices have increased 75% since 2000. One of the root causes for this spike in food prices is thought to be the high demand for food crops to convert into biofuels.

The U.S. heavily subsidizes the production of corn-based ethanol, generating a huge biofuels industry here. The massive volume of corn required by the ethanol industry is sending shock waves throughout the world food production system. Expanding corn crops are cutting into the acreage used for other food crops like soybeans. Soon, corn will compete for land with wheat, as well.

Many proponents of biofuels may not have foreseen the fuel-versus-food competition. But now that food prices have become an issue of global concern, the least the U.S. and state governments can do is to cancel subsidies that artificially prop up the biofuels industry. This is one area where a reversal of government policy truly could help ease the pressure on food prices.

Sreya Sarkar is Director of the Oregon Asset Policy Initiative at Cascade Policy Institute, Oregon’s free market think tank.